MUMBAI, AUGUST 30: Lower than economic pricing to the agriculture and domestic sectors in power alone have resulted in losses close to Rs 25,000 crore a year. While hidden subsidies on non-merit goods amounted to nearly 10.7 per cent of the GDP, Rakesh Mohan, director general of the National Council of Applied Economic Research said on Monday.Delivering the annual Lalit Doshi Memorial Lecture, he warned that fiscal health could be restored only if government received returns from the investments it made. "Public investments made in the past 50 years have imposed an increasing burden on the budget rather than providing returns in the form of non-tax revenues," he said. Most of these services were consumed by the "better-off" sections of society, so there was little basis for arguing about the inability of the poor to pay for them.Advocating a major campaign to bring up the levy of user charges to economic levels, he said this would give both public and private infrastructure entities adequate returns.In the interim, the resources to retire public debt must come from privatisation, he added."Excessive government borrowings have impeded financial sector reforms since the government has to maintain adequate controls on sources of savings to finance itself," Mohan said. This had led to high interest rates and in turn, imposed high costs on the whole economy. It also meant the high SLR on banks to ensure adequate subscription to treasury issues, reducing liquidity for other needs.
